Look To Reduce Tax Liability & Free Up Capital For Reinvestment

Tax season can be a stressful time for hotel owners, but it also presents a unique opportunity for tax savings through available tax credits and incentives. In 2025, there are several key financial tools that hotel owners should take advantage of to reduce their tax liability and free up capital for reinvestment for 2024. Whether you’re focusing on energy efficiency, hiring initiatives, or property upgrades, tax credits can be a game changer for your hotel. In this post, we’ll explore why these tax credits and incentives should be top of mind for hotel owners this tax season.

1. The Importance of Tax Credits for Hotel Owners: Tax credits are among the most powerful ways to reduce your hotel’s tax burden and increase tax savings. Unlike deductions, which only reduce taxable income, tax credits reduce the amount of tax you owe directly, offering dollar-for-dollar savings. By leveraging these credits, hotel owners can reduce the total tax liability for their businesses, freeing up resources that can be reinvested into the hotel or used to improve cash flow.

2. Valuable Tax Credits & Tax Savings for Hotel Owners in 2025: The following tax credits can provide significant financial relief for hotel owners for 2024:

• Energy Efficiency & Green Building Incentives: With sustainability becoming increasingly important to guests, many hotels are investing in energy-efficient upgrades. In 2024, energy credits are still available for properties that make energy-saving improvements, such as installing energy-efficient heating and cooling systems or solar panels. These upgrades not only lower your energy costs but also qualify you for federal and state credits, reducing your tax burden.

• Historic Rehabilitation Tax Credit: Hotels located in historic buildings or districts can qualify for tax credits under the Federal Historic Preservation Tax Incentives Program. If you’re planning to restore or renovate a historic property, you can receive up to a 20% tax credit on qualifying rehabilitation expenses. This can help offset the costs of maintaining and modernizing historic properties while preserving their character.

• Work Opportunity Tax Credit (WOTC): The Work Opportunity Tax Credit offers financial benefits to employers who hire individuals from certain target groups, such as veterans, long-term unemployed, and individuals from low-income communities. If you’ve recently hired staff from these groups, you could qualify for tax credits that help reduce your overall liability.

3. Key Tax Incentives for Hotel Owners: Beyond tax credits, several tax incentives can help reduce your taxable income, such as:

• Bonus Depreciation: Hotel owners can use bonus depreciation to deduct a large percentage of the cost of capital investments like renovations, furniture, and equipment. In 2024, the bonus depreciation rate is still at 80%, meaning you can deduct a significant portion of new assets purchased for your property.

• Cost Segregation: By accelerating depreciation on certain assets, a cost segregation study can result in larger depreciation deductions early in the property’s life, which lowers taxable income in the short term and increases cash flow. This is especially beneficial for hotel owners who have significant real property investments.

4. The Importance of Proper Documentation and Planning: To maximize your savings, it’s crucial to keep detailed records of any qualifying expenditures and to plan ahead for tax season. Many hotel owners overlook tax incentives simply because they don’t track qualifying expenses throughout the year. By working with a tax credit professional who understands the hospitality industry, you can ensure that you are taking full advantage of available tax credits and incentives.

Make Sure You’re Capturing Every Available Tax Credit & Incentive

Tax credits and incentives play a crucial role in helping hotel owners save money and improve cash flow. For 2024, the right tax strategies can make a significant difference in your bottom line, allowing you to reinvest in your property, improve guest experiences, or expand operations. Don’t miss out on the opportunity to reduce your tax liability this season. Be sure to talk with a tax credit specialists to make sure you’re capturing every available tax credit and incentive — and positioning your hotel for financial success in the year ahead.